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Economy

Mortgage demand falls by 27% in the Eurozone and slows down in Spain

Mortgage demand in the Eurozone drops 27% in Q3, the largest decline since 2023, with banks expecting further decreases.

Álvaro Sáez Ferrer
Álvaro Sáez Ferrer
· 2 min read
AIIllustrative image: close-up of a fountain pen on a folded document, with warm natural light.
Illustrative image: close-up of a fountain pen on a folded document, with warm natural light.

Mortgage demand plummeted by 27% in the Eurozone between July and September, with Spain among the countries experiencing the largest declines. Banks anticipate further decreases.

Mortgage demand in the Eurozone decreased by 27% between July and September, compared to 15% in the previous quarter. This is the largest contraction since the third quarter of 2023 and far exceeded the 12% drop that financial institutions had anticipated. The data from the European Central Bank (ECB) comes from El Nacional, which has reported it.

The decline was recorded in Germany, Spain, and France, while in Italy, demand remained stable. The most significant factor was the rising cost of money, which had a negative contribution of 39%, the highest since the third quarter of 2023.

In Spain, the Bank of Spain confirms the trend in its survey: demand for housing loans fell more than expected in the third quarter, while mortgage granting criteria remained stable. Lenders slightly tightened the conditions for consumer credit.

The ECB has raised the cost of money twice in just three months, in June and September, by 0.25 points each time, to 2.5%. Interest rates had been frozen for almost three years. The market does not expect changes until the December meeting, although institutions anticipate that demand will continue to decline.

For the last quarter, Eurozone institutions expect mortgage demand to fall another 36% and plan to significantly tighten criteria, with an increase of 10%. Spanish, French, and Italian banks will apply more restrictive conditions, while German banks will maintain theirs.

In the third quarter, the tightening of mortgage loan conditions in the Eurozone reached 16%, four times more than in the previous quarter. The proportion of rejected applications rose by 5%, above the historical average of 4% since 2015.

Spanish banks have passed on the increase in their financing costs to the general conditions of new loans. Many institutions have raised fixed-rate mortgages following the latest increase, with some now exceeding 5% APR.

Álvaro Sáez Ferrer

Written by

Álvaro Sáez Ferrer

Redactor

Economista por ICADE y una de las pocas personas que disfruta leyendo la ley de presupuestos. Cafetero, padre a tiempo completo y azote de la letra pequeña; en Diario Empresas escribe de economía y fiscalidad.

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